Looks like Warner Bros lost an important potential ally in its effort to double the waiting period for Redbox to secure DVDs and Blu-ray discs. Universal Studios Home Entertainment and Redbox said this morning that they’ve agreed to continue their current sales arrangement — which requires Redbox to wait 28 days after Universal’s new releases go on sale elsewhere — through August 2014. As part of the agreement, Redbox’s parent, Coinstar, has guaranteed up to $10M of its revenue sharing commitment to Universal, the company said in an SEC filing. The new agreement “represents a win for consumers, Universal and Redbox,” the kiosk company’s SVP Galen Smith says. It takes some pressure off of his company: It has begun to buy Warner Bros discs from retailers, instead of directly from the studio, after the entertainment company insisted that Redbox wait 56 days to secure new releases. Redbox said it was prepared to go through the same costly and complicated process for Universal’s videos if it made the same demand. But the workaround would have become “far more difficult to manage” for multiple studios, Wedbush Securites analyst Michael Pachter said yesterday in a report. With this morning’s announcement, Coinstar’s stock price is up about 2.5% in pre-market trading. The new deal with Universal “is significantly positive news and removes a cloud over the shares,” B. Riley & Co analyst Eric Wold says. Redbox’s contract with Fox, which also includes a 28-day delay, expires in April 2013. In January, Netflix accepted Warner Bros’ terms with the 56-day delay.
By DAVID LIEBERMAN, Financial Editor | Thursday March 1, 2012 @ 8:52am ESTTags: Redbox, Universal Studios Home Entertainment, Warner Bros Home Entertainment Group
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